tv Bloomberg Surveillance Bloomberg August 16, 2017 4:00am-7:00am EDT
>> there is blame on both sides. you look at both sides, i think there is blame on both sides. thecine: trump plays charlottesville blame game aga in. more quit the president's advisory council. yesterday's lower-than-expected inflation figure. now we get the latest reading on the u.k. wage growth. broadcast battle. rivals ares tv teaming up to take on facebook and google. this is "bloomberg surveillance"
and i'm anna edwards in london. let's start the program with data out of the eurozone, specifically out of italy. we had gdp data hitting the bloomberg. exactly inline with estimates, 0.4%, the second quarter pulmonary reading. that is what the analysts were looking for. data on abetter number of fronts from italy. industrial output expands in the second quarter. the jobless rate, still too high of course, but coming down. better news on exports and bank rescues taking place in italy. those are some of the headlines in the second quarter. in line with that, we see this better growth picture, in line with estimates and the previous quarter. let's look at where we are on various assets.
1.1720.uro-dollar, heading into this we were at 1.1755. a little bit of sluggishness on the euro. the stoxx 600, up by 0.7%. gold and yen, continuing to s lip. bullishness in stock markets in europe today. -pound, 0.91.o we are going to get the u.k. wage data and eurozone growth figures. we got the s&p futures there, up by 0.2%. the fed figures are otut due later this day. reporter: the british government wants to avoid a physical customs checks on the border.
full sides need to show "flexibility and imagination" to devise an arrangement that would allow free movement across the border. the u.k. government is flushing of the proposal this lunchtime. meanwhile, martin schulz says britain risks further complicating negotiations by producing a series of papers for a talk. >> in the united kingdom, every day they suggest another proposal. this is for sure, not meaningful. customsre, if a union could help to overcome the main problems, especially the guaranty of the freedoms of the european union, let's discuss it. reporter: china has reclaimed its position as the top foreign owner of u.s. treasuries. china's holdings of u.s. bonds trillion.n$1.15
1/3a and japan account for of all foreign ownership of treasuries. amazon has a $16 billion of unsecured bonds to fund the acquisition of whole foods market. it was sold with the yield of 1.45 percentage points above treasuries. the sale marks the first bond 2014. sale in global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. salek, and this is bloomberg. anna: when donald trump said over the weekend there was blame on both sides for the deadly clashes in charlottesville, he caused a national uproar and ceo's quit his advisory council. now he has returned to his controversial position. donald trump: that was a horrible day. i will tell you something.
i watched those very closely, much more closely than you people watched it. you had a group on one side that was bad and you had a group on the other side that was also very violent. w wants to say that, but i will say it right now. -- nobody wants to say that, but i will say it right now. anna: is a mark scott is aid by surprise -- these remarks caught his aide by surprise. scott paul, who became the latest business leader to quit the advisory group. cio also resigned, saying they could not sit on a council of a president that tolerated "bigotry and terrorism." stephanie baker joins us this hour. let's talk about the u.s. and where we stand economically. tim hayward is with us. as well as michael bell come also with us on set.
a busy newsroom for us. the latest out of washington and new york. stephanie, let's turn to you for the latest news flow about this business advisory council, the people stepping back. this was supposed to be about investment, this press conference. another example of that news agenda being sidelined. >> exactly. he was supposed to be talking about infrastructure spending and was supposed to leave after that announcement, but he cannot resist the temptation to answer questions on this and that. this led him down this path that has shocked so many people and caused outrage. i think we've seen seven executives step down from his business council. i think many are under intense at,suere now to look should they stay or go? is it worth it, being able to shape policy, or is the risk of
alienating customers and employees worth it? on twitter, you already have a campaign called #quitthecouncil. i think these companies will face to pressure from customers, employees, and from the public to take a stand. anna: there were lobby groups targeting for example, pepsi management and others, calling on them to step away from any advisory capacity, or any role they are playing in these councils. the story might not end here. could see more business leaders deciding they don't want to be involved. issued a very ceo strong statement, criticizing donald trump. some executives are weighing, what if i speak out, but remain on the council? facing the consumer business leaders will have a harder time remaining on, but you then have major companies like boeing and united
technologies that do big business with the government and the equation will be much more difficult for them as they go forward. i think many might be thinking, why did i join the council in the first place? it means whatever i do will be interpreted one way or the other. anna: it is interesting you make these contrasts yo. stephanie, let's stay with us. i was drawn to a chart one of our producers found this morning. erasing outperformance, versus the s&p 500 after the election. just another example of the trump trade. is it still being discussed in those terms, being dead? >> i think that is true. so far this year the market has moved to completely price out any hope of fiscal stimulus from the u.s. that might be a little bit too harsh.
i don't think it is a best case scenario, but idle think there is zero possibility -- but i don't think there is zero possibility you get any sort of this stimulus by the end of the year. when you come around to talking about tax cuts, potentially repatriation of foreign profits and infrastructure spending, they should in theory, the easier wins for the u.s. and menstruation to get through than health care. i don't know if it will happen, but it is not a zero probability. anna: what is your assessment of that? how much is baked in? how much assumption is made that donald trump can deliver on taxes? i know the high tax companies, versus the s&p, they have also lost their relative outperformance because many thought they would benefit from these tax cuts. >> in a way, they have been unwinding since the beginning of the year. the dollar bond market has been one of the strongest markets. there has been a flatter yield curve.
it has been a steady unwind. the dollar is no longer necessarily the weakest currency. tohas began gather some poise. garner is beginning to some respectability. since, it was happening april. the more he says, the less people will take them seriously. it will be done to everyone else in the administration to push for the policies of the u.s. the markets seem to be believing the slight disappointment on economic growth in america relative to europe is beginning to change. anna: thank you all very much. you time, thanks haywood and michael bell. stay with "surveillance." plenty coming up.
this is "bloomberg surveillance ." let's get to the bloomberg business flash. reporter: exxon mobil has come to an agreement to call a truce over the standoff. the activist investor has agreed to back the swearing in of the ceo next month. he will also support the plans to separate the chemicals division. a.p. miller has reported a net
loss in the second quarter. the transport logistics company when $269 million, on analysts had expected a profit. first have profits beat analyst estimates. the brewer said earnings before taxes rose to $652 million. they reduced costs and benefited from currency shifts in russia. ceo will beg joining us at 10:00 a.m. u.k. time. anna: the u.s., mexico, and canada began official talks on revamping the north american free-trade agreement. accord, h23-year-old as been described as president trump as the worst trade deal ever made. let's move ahead with jodi
schneider over in washington and new york. these talks then, set to take place in washington over the coming days. what is on the agenda? >> yes, they are essentially renegotiating the 23-year-old agreement. there is a lot of issues from everything from, issues like buy america to duty to environmental standards -- all kinds of things. while president trump has said he wanted to rip it up at one point, and as he mentioned, called it the worst trade deal ever, now that seems to be less than the goal than trying to renegotiate in a way that will a id the u.s. in helping with the trade deficit with mexico. before nafta, the u.s. had a slight surplus and now there is a $63 billion trade deficit, something the u.s. wants to change with these negotiations. we saw him in those images,
there with the canadian prime minister, justin trudeau, on the campaign trails. since his election, president trump has had a lot of heated rhetoric, but recently, things have been toned down. >> yes, i think he realizes that if they can negotiate it in a way and redo this agreement in a way that benefits the u.s., it is better than throwing it out. of course, these will be very complicated talks on a number of issues, but reducing that trade deficit with mexico is something he wants to see. at this point, he has been much more measured in his rhetoric about the deal. anna: jodi schneider, thank you, joining us from hong kong. michael bell and tim haywood are still with us in london. mike, looking at the constant news flow around nafta, there was a lot of rhetoric during the
campaign. some of it has died away. i spoke to an fx analyst and he said that damage has been done in terms of fx, and this will be tinkering with nafta. that's all for the good; perhaps it does need an update after 20 years, but nothing major. is that your expectation? >> we are actually moderately overweight on the mexican peso at the moment. there is some risk in the worst-case outcomes of the nafta negotiations. we are happy to tag a little bit of risk there to the carry on offer. mexico is reasonably attractive. we are willing to take that nafta risk at the moment, which gives some idea of the likely path of this playing out. anna: tim, does that join with your thoughts? >> i think the mexican peso is the best performing currency of
the year. anna: after a big fall. >> which is a further reversal of trump trades. it is interesting how some of the rhythms could change the u.s.ian, mexico, and relationship. we know the canadian breakevens are quite high. in mexico, the big difference is cars and car parts. with that, we are seeing changes in the whole car business, with ownership, taunus vehicle and the move towards electric. -- with ownership, the au tonomous behicles and the move towards electric. anna: talking about the global trade flows, i was drawn to the risks, very negatively dealing with the affects of the cyber attack of june. we have seen increases in that particular sector.
there was huge overcapacity, and then there were a lot of m&a deals done. and now the freight rates are on the rise. does this tell us something about global growth and the strength of global trade? >> undoubtedly you have seen a pickup in global growth over the last six months and you see that through the trade figures as well. there has been a meaningful uptick. i think that's filtering out across the world. i think it is showing you that really, there has been quite an improvement. i think the majority of that acceleration is behind us now, but we are still at a relatively healthy growth rate. anna: michael bell stays with us. tim haywood stays with us in london. why traditional television rivals are teaming up to take on the threat from google and facebook. this is bloomberg. ♪
welcome back. you are watching "bloomberg surveillance." i'm anna edwards. european broadcasters are teaming up with each other to fend off competition from google and facebook. that, as global digital is supposed to surpassed television for the first time this year. let's get more from our telecoms reporter, who joins us here. so, we think this tie up between
broadcasters only now. why all of a sudden feeling the pressure from an environment that has been changing for some time? >> for the last decade we have seen online ads take away from print. so, newspapers, magazines, billboards. right now we finally see those take away from television for the first time. we are hitting a tipping point, where these television broadcasters are saying, we have got to react here. anna: what are they trying to do? are they trying to provide better data to their clients? >> they are trying to compete with what google, facebook and youtube can do, providing targeted ads. they get all this rich information coming from the users of their services. television broadcasters are finally saying, we have got that information, too. we have got web enabled televisions, which can gather demographics. in partnering up, they plan to deliver more scale, more volume
of customers that advertisers can sell to. anna: as we see these cooperative arrangement, it begs the question whether we will see real consolidation taking place. the industry is becoming incredibly global. it is not just a domestic broadcasting environment. you can get u.s. shows through the internet incredibly easy around here. >> that is right. it is an incredibly active m&a landscape. you don't see the so much in europe, but it begs the question. in the past we have seen speculation whether the parent company liberty global would go after television, marrying up content providers to offer a bigger platform for advertisers. anna: what are the broadcasters doing to try to stay ahead here? they always argued that maybe the ad revenues they spent online, maybe it does not go to the eyeballs of all the people
it supposedly does. >> in addition to the ad spending online, the online players are competing head to head with the tv guys. you are seeing amazon get into tennis sports. , so what these tv broadcasters have to do is prove their content is still king. whether it is adding to l ive broadcasts of sports are investing in studio productions. anna: content, as always, king. up next, we break the latest u.k. unemployment and wage data. this is bloomberg. ♪ got you outnumbered.
find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. anna: welcome back. you are watching "bloomberg surveillance." let's get the bloomberg first word news. sebastian: the british government says it wants to avoid a physical border with ireland as part of any brexit
deal. the brexit department says both sides need to show flexibility and imagination to devise an arrangement. china has claimed its position at the top owner of u.s. treasuries after increasing its holdings for the fifth straight month. china's holdings of bonds, notes, and bills rose to $1.5 trillion. the two countries account for more than a third of all ownership treasuries. amazon has sold $16 billion of bonds to fund its acquisition of whole foods markets. a 40-year security was sold at a yield of 1.5% above treasury. that is according to a person with knowledge of the matter. news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. anna: thanks very much. let's get some u.k. data.
unemployment rates and wage numbers coming through. second quarter unemployment rate falls to 4.4%. instead of matching the prior a further've seen reduction in the unemployment rate in the u.k., now 4.4%. the wage number, the estimate was for a match of the prior number at 2% on weekly earnings excluding bonuses. the expectation was to present and we got 2.1%. a little more strength than had been expected. the bank of england, this 4.5% level of unemployment, they see 2%% as consistent with inflation. a little volatility in the pound. this is the pound against the dollar. the pound against the euro also on the move. we got up a little bit higher this morning. we were at 0.914.
a little bit of movement on euro-pound. we get the eurozone data in the next hour. still with us, tim haywood, and michael bell. tim, let's come to you on the question of wages. 2.1%. the estimate was for 2%. a little stronger than expected. in many senses, to be welcomed. people were asking whether the phillips curve was missing action. how do you greet this data? 0.1%i'm not sure completely vindicates or ruins, but it is a sign that there is ,ome pricing power for labor which is to be expected. that said, the economy may be having a moment where it starts to slow down somewhat, especially since there's such
political uncertainty on brexit. anna: where do you stand, michael? where do you think this leaves the bank of england austin mark we've been showing the session chart. this is the euro-pound over a longer time horizon. a lot of people talking about whether we go to parity. is that something you are looking for? michael: it depends on the time horizon. the short-term models we look at, we've been shorting sterling against the dollar. it has come down closer to our fair value estimate. we're taking those positions off for now. if you look at the euro, we are thinking the euro should go a little higher. against the dollar, we think .here's a mid-1.20 gosh figure in the short-term, a lot of that is going to be determined by relative rate differentials.
if you look at dollar-euro, people are already quite long euro or short dollar if you look at speculative positioning. if the fed put rates up a little faster than the market is expecting, you may see a reversal in the euro. i don't think it is impossible that you see sterling in the medium-term, that you see euro get closer to parity, but in the short-term, we maybe wouldn't be placing that trade. anna: what is the biggest factor in u.k. assets? is it all the detail around brexit? we're getting more detail on what the u.k. wants, what the u.k. government is suggesting. we're getting more detail on that. i spoke to stephen gallo and he said what matters is whether this government manages to hold together through the votes on the great repeal bill and
potentially volatile events in september-october. michael: we were discussing how marginal so many things are in this country. 3% to 4% difference on voting between parties. the politics is very finely balanced. for us it is the economy. better than people expected from june last year. we think there's a little bit of weakness creeping in. i think maybe the last of the good, strong news. we're looking for a slightly week pound and we are looking for gilts to sort of perform better than in the past. anna: you shouldn't just look at one month of data and say there is more wage pressure in the u.k., premature to do that because you think there will be some weakening from here. we thought inflation
would be quite elevated for a while. it was this sort of underlying wage growth. we've been waiting for this data for some time, but we don't expect it to have much further this. the economic growth is not so powerful here. anna: mike, your thoughts around the u.k. growth story. the squeeze that we've seen on consumers is part of the story since the brexit vote took place. one impact are you seeing that have? are you seeing material evidence that those are being put on hold? michael: the bank of england highlights that there surveys show a rebound in investment intentions, which had collapsed following the referendum. they are a pretty good lead indicator for investment and we would expect there to be some rebound. on the other side of the
economy, which is the bulk of the economy, the consumption and domestic side, you are seeing signs of meaningful weakness. the bounce in consumer confidence has now dissipated. consumer confidence back below where it was after the initial fall. that suggests the consumer side of the economy is slowing. the house price survey has been slowing down. the domestic side of the economy may weaken more than the bank of england forecast. mike, thank you. mike bell from jpmorgan stays with us, and tim haywood also stays with us. cathay pacific, the airline ,perator, first-half net loss 2.0 5 billion hong kong dollars. the estimate was for 1.2 billion. this is substantially more than expected.
they are saying intense competition caused this loss. fuel accounted for 30 .4% of the first half operating cost. they see benefits from their transformation taking place in the second half and the outlook for the cargo business is good. now, up next, could the germans feel good factor be what stops martin schulz from taking over as chancellor? we will discuss german growth and what that is doing to the mac run cap. this is bloomberg. ♪
european stocks. onsaw the stoxx 600 rise 1% monday. yesterday was more muted. we are up 0.7% in today's session. ftse 100 at its highest in a week. dax at its highest in more than a week. every industry group in the gain -- the green. telecoms lagging a little, but still green across the wheel on the imf. taking a look at sterling, we have seen sterling higher after that wage data came out this morning. yesterday, we saw some weakness in cable. this is showing the net positioning. it is as of the first of august, 2017. still a lot of bearish positioning on cable. we're above 1.28 in this session. turning to the aussie dollar, here we've seen that we can
after some wage data, but still the retracement to hit that 50-day moving average. it is the head and shoulders pattern we're looking at. 78.63 is where we are on the aussie dollar now. finally, looking at treasury yields, these will be in focus. even though we've seen yields move higher in the past few days on treasuries, the downtrend is still intact. the higher yields you've seen in the past few days versus what is happening with chinese debt means this spread has been tightening. is that going to weigh on the yuan going forward? anna: thank you. let's turn our attention to the eurozone growth story. martin schulz's biggest obstacle may not be angela merkel, but a feel-good economy that has proved to be fairer than its european peers.
six weeks to go until the german election, schulz is struggling to gain momentum after 12 quarters of unbroken growth. 51% prefer angela merkel as chancellor against 22% for martin schulz. let's discuss the eurozone growth engine. tim haywood is still with us, and michael bell. on the german growth story, it is easy to see how a feel-good factor driven by growth supports the incumbent, tried and tested route, i suppose. tim: indeed. the economy is stupid. havement prices in germany been on a decent trajectory. the sense of personal wealth is strong. the unemployment in germany really contrasts with italy, where property prices are not going anywhere. germans should feel particularly good, until they look at their bond markets, whether yields are
negative. were there to be just german monetary policy, one cannot believe they would have negative two-year and five-year bond yields, but they do. anna: and german corporate's get to borrow for less. michael: there seems to be a rush to lock in some low yields. anna: mike, does this continue from here? we've heard german voices were quite vocal until the summer perhaps, calling on the ecb to roll back the stimulus program earlier than some would have wanted. you see the growth story continuing? eurozonewe think growth is pretty broad-based. we think germany is going to deliver about 2% growth and that continues into next year. you are seeing a pickup in growth in some areas that had been lagging. you saw a rise in the pmi in italy. that had been trudging around the low 50's.
that is good news. germany is not the key question. germany of people in want to stay in the euro. anna: bill working assumption is, angela merkel wins unless we get an upset of that scale. michael: it actually doesn't really matter even if schulz wins. that is not a problem for us as investors. the only political thing in our mind at the moment is italy. the unemployment rate is falling. if you look at spain, back in may of 2013, the unemployment rate was 26%. as unemployment has come down, support for the euro has risen to over 70%. you are starting to see that in italy. unemployment is falling. support for the euro was 53%. the latest barometer shows it rising to 58%. italy is the only risk left in
the eurozone. that i was reading reports suggested italy is trying to shake off its mantle as the sick man of europe. economic recovery extended for a 10th straight quarter. a lot of people talk about the need to address the banking sector. your expectations around italy, to what extent does that hold the key? tim: the italian election will be pretty critical. there is, possibly greece, i would include as a problem child, but the iberian peninsula seems to be much improved. the fastest growth has been driven by credit impulse. it is the rate of change of bank lending that really drives so much of the growth story. europe has been surprisingly good year after year because of credit impulse. china has been the flip side. we are seeing that fade a little bit. anna: what about the strength in
the euro? is that something that comes to nip the growth story in the bud? tim: i don't think so. there is less sensitivity to currencies than in the past. models don't seem to be working. we have lower unemployment, slightly higher growth, and lower in nation. many people have been reporting saying, our quite -- our models aren't quite working. anna: thank you very much. tim haywood stays with us, as does michael bell. up next, softer inflation, harder battle lines. we discussed the outlook for rates and the balance sheet. this is bloomberg. ♪
to back the swearing of a ceo next month. elliott will support akzo's plans to separated chemical division. the transport and logistics company lost $269 million when analysts expected a profit. maersk said a ransomware attack will hurt earnings in the third quarter. carlsberg has disappointed investors by leaving its full-year profit unchanged after reporting earnings that clearly beat estimates. shares are lower as it still anticipates single-digit earnings. operating profit rose 15% in the first half. girls berke ceo cees 't hart will be joining us for his first interview of the day. that is the bloomberg business flash. anna: the fomc minutes are due out later today. fed watchers are hoping for clues on how many policymakers
want a negative interest rate and how many are wavering after the softer inflation report. they will be looking for more details about when the central bank will begin running down its balance sheet. tim haywood and michael bell still with us. mike, on the fed, your expectation -- we're looking for any clues as to whether any of the previously hawkish members of the fed have wavered at all in their desire to see another rate hike in the u.s. are you expecting another one? michael: i think one more. in september, they will announce the start of the balance sheet reduction in october. assuming that will go smoothly and you don't have a massive shock with bond yields moving up dramatically, they will raise rates in december. a lot of people talked about how that was doing some tightening for the federal reserve, and reduced the need to put rates up. we are seeing the reverse this
year. easedial conditions have as the dollar has come down. the fed probably want to put rates up. anna: some of that weakening in the dollar, higher rates in the u.s., at least one more time. tim: it builds some symmetry going forward. for there to be another crisis, gives them some gunpowder. michael, one in december. we disagree slightly about next year, whether the dots will be vindicated or whether the market will be proved correct. anna: it might depend on the fiscal side of things, and the growth story in the united states. this chart, a more tepid outlook. economists not quite as optimistic about growth in the u.s. as the president is. divergent views about where u.s. growth goes for the next year.
where are your assessments at the moment, tim, and to what extent does this mean we get -- we started this conversation on whether trump could deliver on the fiscal side. tim: i'm afraid the more he speaks, the more he seems to be distance from the rest of the world, and the less people pay attention. on growth, it seems it is difficult to knock the u.s. below 2%. it seems to be remarkably robust at this speed. anna: where does that leave the fiscal story for you, mike? we talked about whether we can see tax cuts. you remained quite hopeful. would that be too much of a boost? does it need that kind of fiscal boost? michael: no. would you could say is, if you look at that chart, what you can
say with a high degree of certainty is that that forecast of 3% is almost certainly wrong. the likelihood of their not being a recession in the u.s. by 2021, i think is really quite low. the probability of recession in the short-term is quite low. probably a 20 -- i think things are good over the next year, maybe two years. over the next four years, the probability of a recession is quite high. in terms of the fiscal side, save the fiscal stimulus until after the recession rather than do it when the unemployment rate is already very low. it is much better to kick start the economy using fiscal stimulus when there is more spare capacity. anna: maybe the procrastination on capitol hill helps in that sense with the timing. tim: i agree with this idea of
gasoline on the already hot fire, but after a number of resignations, he may need to woo back the corporate sector. managedss that he has to paint himself into, if i'm mixing my metaphors, he's got himself into, is quite impressive. i worry about any fiscal action at all. it is not needed. anna: thank you both for joining me. ,l. haywood, michael bel that will do it for "bloomberg surveillance." continues in the next hour. tom keene and guy johnson are here. this is bloomberg. ♪ ♪
in moments we have for you european gdp data. it is called a physical border infrastructure with the republic of ireland and the united kingdom. will they return to the reality and symbolism of border checks and customs searches? and chaos within the trump administration in a frenzied and impromptu press conference within the walls of his new york city tower. the president revisits, defending the actions of supporters of white nationalism and supremacy. this is "bloomberg surveillance ." i'm tom keene in new york and guy johnson in for francine lacqua. we will have taylor riggs without first word news in a moment. tell me about the european gdp data. we see it there at 0.6%, the advantage of the bloomberg data screen. when you look at that, guy, is it a recovering europe? guy: it is, 2.2% is the number
on the european basis. this is a reasonably broad-based recovery, spurting out from core to periphery in italy. so, a reasonably broad based recovery coming through. and the data is supporting that. will a strengthening euro start to eat into that story going forward? the firstee, this is day where we seriously consider jackson hole. right now to the president. in our first word news, here's taylor riggs. reporter: president trump has backtracked to his original position. saidw york, the president there was blame on both sides, blaming violent liberal counterprotesters who confronted the white supremacists. the white house asked republican lawmakers to defend the president's remarks.
in alabama there will be a runoff for the republican candidate in the u.s. senate race. luthor strange will face former alabama supreme court justice roy moore. strange was appointed to fill the senate seat held by jeff sessions. in the u.k., the employment rate has not been this low since 1975. the jobless rate fell to 4.4% in the second quarter. the fast disinflation in four -- the fastest inflation in four years ate into the british workers' income. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm taylor riggs. this is bloomberg. tom: taylor, that is an extraordinary banner about the united kingdom employment back to 1975 levels. extraordinary data check -- i'm kidding. there is not much going on. the futures up.
guy have got a better data check and i do. the vix, 11.54, the yen, weaker. the yen and korean won, a litmus paper. guy, the better than me. guy: i will try. here is the stoxx 600. upopean stocks are reasonably this morning. we heard from taylor about what is happening in the u.k. above 3000 anc is ton for the first time in ten years. that's an electric car trade. talking about the broad brush recovery in europe, europe very strong, along the central rake tbank to keep hiking rates. tom: a discretion of
infrastructure turned into a frenzied press conference. standing behind the president, secretary mnuchin, gary cohn, and off on the side, general kelly. it was the president. president trump: there is blame on both sides. you look at both sides, i think there is blame on both sides. tom: just a whisper of what we saw yesterday. it is extraordinary and we need the perspective of decades of coverage from washington. martin is our senior executive editor for frenzied press conferences. absolutely extraordinary yesterday, to see what twitter does in the news well. what damage was wrought by the president? >> i think a lot of republicans are trying to figure out where they stand on this. well, even for this president, it was a rather extraordinary performance on saturday. he had a very scripted message, which everybody thought would
get this issue behind him. then he comes out and basically goes to where he is most comfortable. this is who donald trump is and we better get used to it. tom: the most uncomfortable, was his cabinet and staff. the photograph over at getty photos of general kelly, the chief of staff, it was extraordinary. do you presume within our reporting that we will the resignations by administration officers? >> look, there have been many moments in this trump presidency where we would speculate who was going to be the first one to jump ship out of principle. when he fired james comey, when he accused obama of wire tapping. those things were moments. there are people in the white house that have stuck with him. i think a lot of those people think they are serving this nation as they serve donald trump. expect anynk you can
resignations. we have seen it before and people move on and do their jobs. guy: a question from a different angle. did gary cohn's proximity to the president yesterday damages chances of becoming the fed chair? >> final think so. has saidall, gary cohn he is not really interested in that job and loves what he is doing, but our reporting says he is interested. people -- and donald trump likes gary cohn and values him. i don't think it damages his chances at all. guy: what about the interface between the president and business? there are plenty of senior leaders that are sticking with the president at the moment. asked a question about resignations within the administration. what about resignations continuing in those business councils? >> there are all kinds of competing interests among the ceo's. the under armour ceo was facing
a boycott on social media. g.e. is one of the largest government contractors. so, they have to at not only a moral stand, but a business stand. each individual ceo has to make a determination of where they sit. we might see some and we might see none. as donald said, he has people waiting in the wings to take their places. this council does not really do anything anyway. it is symbolism. tom: in the manus yesterday i believe i someone of the trump sons exiting quietly around 56th street. i'm not sure. where is the family around all of this? i have seen reporting on what the family is actually doing. are they trying to assist the president, or are they as shocked by that press conference? >> our reporting is that donald trump had his saturday statement in front of them and they expected him to repeat that line. even if the family is whispering in his ear, it's not
doing any good. tom: i look at business as usual. do we get to a point where republican leaders say, we won't vote for anything unless you straighten out? we go back to what we have talked about for years. where are the adults in the room? >> well, you do wonder what mitch mcconnell and paul ryan are going to do. they have distanced themselves from this president already. they set the course that they think this nation needs to go on. so, i think they will follow through with the agenda that they themselves believe in. that's tax reform. before even that, they have to pass a budget and debt ceiling increase, and that will not be easy. guy: absolutely not. marty, this was meant to be about infrastructure. we pivoted fairly quickly. how do you deliver the infrastructure plan now? who delivers it? how do they deliver it? >> all good questions.
as i mentioned, before they even think about infrastructure, they have to get a debt ceiling, and they have to get a budget passed. even after that, the priority is tax reform. so, infrastructure is not happening this year, in my opinion. they will be lucky if it happens next year. donald trump's ability to pass legislation has been displayed in the obamacare repeal and replace. he could not do it. congress could not do it. there are factions within his own party. this september will be quite a thing to watch. guy: absolutely, and he will be right there for us. marty, thank you, joining us out of washington. let's to the now. we have just seen eurozone data being released. the growth number is strong, north of 2%. stocks trading lower.
investors, a little disappointed in the full year profit. let's talk now to the ceo in his first ceo of the day. we have just seen eurozone data released. and gdp numbers are strong. can i draw a line between gdp in the amount of beer people drink? >> this is a difficult correlation. it is always helpful the moment the gdp is increasing. but in this european market, there is more and more an interest in more expensive beers. confidence for the future. and you saw some of that reflected already in our first half of the year for europe. guy: the market is a little disappointed you have not raise guidance. your crosscutting plan looks to
be ahead of schedule. why didn't you raise guidance? >> well, we are just midterm. alls withry specific c regard to q3. the -- basically, having some visit last year. secondly, we are investing further in the sale in 2022. in all, we cap to our guidance. tom: there is a lot of geopolitics going on right now, mr. hart. i would like to know how you are adapting to the turmoil of europe into the sanctions that we see around ukraine, around russia. how is carlsberg adapting day 2017 geopolitics? >> in russia and for the
ukraine, we have local operations. so, headed by mainly russians. many breweries in russia and the ukraine. we are not depending on the geopolitics with regards to exports. guy: when you think about consolidation, do you think about what is happening in central and eastern europe? how do you react? how do you deal with that going forward? how are you going to make your position more competitive? his remains a critical part of the world, as tom -- this remains a critical part of the world, as tom said. >> russia is very important for us. the fact that two formidable competitors moved into one, you can look at it in different ways. we learned that consolidation is always better for the market.
that is how we looked at this merger as well. so far, we have a renewed commercial program, which is successful so far. we will continue with that. guy: one final question. when you look around the world and think about what will happen going forward and you look at the currency story and the headwinds you could ultimately face, you are pegged to the euro in so many ways, which is strengthening. how much is currency playing a part in your planning? >> of course, it is an important part. it is difficult to predict. you have seen this morning that ballot foredo our the remainder of -- our outlook for the remainder of the year 300 million is now possibly 500 million. that means that in three months, quite a lot can happen. it is difficult to forecast, but
obviously it plays a role in terms of the equation of our business. for cees 't hart, thank you joining us from copenhagen. let's pivot back to the united states. fomc minutes will be released at 2:00 p.m. eastern time today. investors are looking at clues on the likelihood of a rate hike this year, especially after that stretch of soccer data we saw around the inflation data. the dollar in treasury yields rising yesterday. we saw sales data was good. it exceeded forecasts in july. kinsella. now peter good morning gentlemen. charles, let me start with you. when you think about what the fed is going to do next, how it will maneuver throughout the rest of the year, we have got the balance sheet, which we think will be coming in september, and then we have got
this rate hike potentially coming through in december. the data is mixed, but is getting better. the retail sales story tells a positive story for the united states consumer. but do you think that data is irrelevant? the fed still sounds hawkish in aggregate, despite the inflation story. >> the inflation story has been the fallback for the last few months. but we're expecting that inflation will pick up next year. there's a lot of aspects of inflation, which particularly on -- wage front, are affected which inflation is affected by actual inflation with a huge lag. so, quite a lot of what we are seeing at the moment could will be reflecting the fact that there was no inflation at all in 2015 because of the collapse. and only one present until august -- and only 1% until august.
from our standpoint, it looks that inflation will pick up next year. the economy is still growing at an above trend rate, but the trend rate is very low, about 1.5%. the economy has been growing consistently at 2%, or slightly better. we would expect the fed to stick to its guns. guy: the u.s. is trading at 2.2%. is that the wrong price? >> i think it is fair. 2.2% is fair enough, given the 1.5%.etween 1.2% and 2%,ould get up to around but at some point we will get a change in the cycle and rate cuts eventually. if you average it out around 10 years, i think 2.2% is even too high. guy: charles, to me it is a
little bit of physics and utilit dynamic. is it a more anglo-american model, or something unique to the continent of europe? >> well, i think if you devalue heavily when you are already in surplus, as they did a couple of years ago and at the same time you get a huge bonus from the collapse of the oil price, which happened at the same time, you get a kickstart on the economy, which then carries forward under its own momentum. we are talking about an economy that was significantly below potential. and now it is moving slightly above potential, but it is normal for economies to grow faster than potential. during the strong patch of the cycle, and that is what we are seeing. guy: help us with the physics, peter kinsella. where's the consolidation price
for euro? >> if you look at the trade weighted euros and the dollar, it would be somewhere around 1.25 for the euro-dollar. in terms of positioning, if you look at them, hedge funds, real money, there is a larger euro. however, corporate are playing catch up with the long year dollar trade. if you look at the imf data, it seems central banks have missed the move. it seems the short covering move from central banks will be next leg higher. tom: peter kinsella, thank you so much. we have a very interesting set of yours. we have got michael barone galy ind suggestio sebastian
which hadlast week, relatively low yields. the credit market, is it being rational here? peter kinsella and charles dumas, joining us. let's kind of figure this out. peter, let's look at this story and try to figure out the implications. amazon just sold 40 year paper at just over treasuries. it might be a decent pickup over treasuries, but the u.s. government has not yet stepped into this story. i know it is being considered. do you think if he looked at this yesterday and said, there is demand, i can do this -- and i relate this back to the infrastructure story we were talking about as well. >> i think, yeah. money treasuries are issuing longer and longer dated paper.
yearnd recently had 100 paper as well. a few treasuries are issuing longer dated paper. i would do exactly the same thing. it is a logical thing to do, lock in low yields. guy: you think the credit market is acting rationally, charles? >> the credit market has a flow of funds, and they have got to put their money somewhere. that is what they do, buy the stuff that has got some yields. do i think these yields will persist in the long run? no, in that sense, if you have the capacity to wait, you should. but you might have to wait five years. in the meantime, you have trustees breathing down your neck. tom: let's look at the agony of amazon, the weighted average
cost of capital chart here on bloomberg. this is one of the sneaky value ads on the bloomberg terminal. i will at taylor riggs out here to instruct on that operating profit after taxes, but it is august and we don't want to work too hard. peter kinsella, i see the elephant in the room, which is under 5% debt. that is difficult to see on television, 4.8%, but you can see that on the pie chart. there is the economic juggernaut, which is amazon and there is the miniscule amount of debt they have. this is the new finance they can, isn't it, which they can take to the debt markets? it is instantaneous. >> i agree and we will see a lot more of it from various high-tech companies and others. these companies have the very significant cash piles and huge equities in their overall
balance sheet. it make sense to issue low yields. tom: you wonder what the lemmings will do when the rates actually start to go up. tion.traordinary transienc guy johnson, i was not aware of that 40 year paper. we will continue with peter and charles. coming up, one of our favorite guests. he has been unbelievably dead on bricks andollapse of mortar retail in america. this is bloomberg. ♪
blowing past where the estimates late. $18.2 billion versus $13.5 billion. laura wade numbers. top line running right now. you can go through the details. tom: brink of the chart. an incredible story, i do not pretend to be familiar with it. would you like to make 44% a year? there is a tencent chart and what is important, that is a long chart. you do not see charts for do this. -g and the stock over 10 years went from six dollars and seven dollars up to $300 a share. slow matters and -- slope matters and that is ginormous. is: the fact that apple
increasingly shelling out a japan and a using it on the transit system and tencent is a part of it. it will be interesting to see. let's catch up with everything else we need. here is first word news with the tyler perry taylor: -- with tyler. -- taylor: president trump on his violence in charlottesville. president trump: there is blame onto both sides. i have no doubt about it a you do not either. taylor: at a press conference, the president faulted what he called violent liberal protesters. the white house sent out talking points asking them to defend the president. president trump said the ceos quitting are not taking their job seriously. 4 chief executive have left
including the merck ceo, ken frazier. chuck robbins said that merck is an exempt -- dry said merck is an example of a company -- trump said merck is an example of companies having their products made overseas. the president has threatened to end certain insurance subsidies under the law. rivals said the u.k. needs to keep it simple when it comes to brexit britain couple katethey may by producing a series of position papers for the talks. comes to brexit. schulz says they may cooperate by producing a series of position papers for the talk. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, i am taylor riggs. guy: mr. schulz wants to keep it
simple but in many cases, it is complicated. they said they want to avoid a physical barrier with the eu and tensions are mounting over the terms of the departure from the bloc. fleshing out the proposals at noon london time today and the full press -- brush overnight. simon kennedy is with the and charles dumas. simon, this is one of the things that the eu wants to get isolved and at the u.k. saying we do not want to have a border, the details are kind of important because in order to get so much of the other stuff, you have to get this to work and it fits in with the rest of the story. does the u.k. proposal look credible? lukewarmnedy: it looks as we saw yesterday. this is to be negotiated and so
the eu showing their hand and said in the past where he would not want a hard border, the french is worried open border would allow migrants to pass easily into the eu. there's a whole series about not only the irish border but what it means for the brexit. it is something they have to resolve to get the trade talks. said we can resolve this with technology. is that something people are thinking could happen? my understanding is aged customs will need a large budget -- agent customs will need a large budget. number plate recognition, etc.. simon kennedy: this is the ambition.
it is going to take years, a lot of money. it is going to take the customs office, they did customs and last month we saw the public spending. that initial plan will not be ready for brexit, let alone a suit of 1 -- souped up one. it is aspirations of technology. whether that israel is another question. tom: good morning. -- whether that is real is another question. sign with -- tom: a an northern ireland saying british customs, all vehicles must stop.yclists that is the fear, explaining to our were global audience what is the historical baggage of actually having a customs stop on a country road between
northern ireland and the republic of ireland. what baggage does that carry from our childhoods? it is hard to achieve and it undermines in some people's view the peace deal that has the successful in recent years and raises up a whole series of debate. the island's history created and there is concern this could unwind some of the good work done to date. a question that vaguely fits in. may's administration made clear it feels we can do deals with a lot of other countries. first, a deal with the united states. there is increasing pressure that the u.k. should rescind its offer of a state visit to britain for what does it mean for brexit? simon kennedy: a lot of countries are on top of the list.
if you look at the list from the trade office and obviously with the drone, a lot -- trump, a lot about deal. as we saw earlier, and virginia where it, theresa may went -- in january, theresa may went to washington. that will not to be a way to get a deal is -- if it is revoked to see the quinn. and with trump, how much of portis would he place -- if it is revoked to see the queen. , howd with trump important it is he would place on trade. guy: the irish border, can i assume that friction with the eu
goes up? the government talks about the border, this virtual border that simon is talking about that technology will resolve many of the problems. is this was you see? economics, of the the eu has a huge surplus with the goods and overall. and therefore will lose an enormous number of jobs unless there is a free trade agreement. they have a strong incentive to do that. the likelihood to sacrifice jobs for certain negotiators is low. that is one point. the other is the whole thing cannot be wrapped up and the lastset of two years from march. there is going to have to be
some type of transitional arrangement. when they set of the terms, maybe that will run to the point where it takes four years. the likely transitional period is at least two years additional , which is a total of 4 years. two plus two still equals four and post fact world. problems are huge. they are solvable. tom: i am fascinated in the doldrums of august about the biggest mystery for your brexit team. everybody is on the holiday. you people are trying to look forward to the mysteries of september, what is the biggest mystery? that we have seen in the last two days is the idea that the u.k. is still negotiating with itself. reports of this morning that
boris johnson, the former secretary and a trade secretary do not like the law -- long transition. of the thirdeve isnd of talks, the eu negotiating with itself and push and opposition papers which may cause discourse. they have quite a summer. papers -- and while it they want to see some clarity from the british, they probably feel they are negotiating with a divided party in the u.k. tom: it has been raining here. -- guy: it has been raining care. morgan stanley things will left parity. when it comes to your role-sterling -- your role--- euro-sterling. >> the banking system here in
the u.k. was imploding. the high was around 0.98%. that was high as it got as the peak of the crisis. now, wee will get there have seen an increase in inflation but not huge not like domestic prices and the u.k.. to say we will get all the way one ia big call, not agree with. i think sterling has been low. get to clarity is a big call. tom: thank you, peter. simon, appreciate it. great will be with us later, one of the most astute analyst of the politics of washington and he has a bombshell memo he states the chief of staff will leave by thanksgiving or sooner. he goes on to say that the trump polling may drop below 30% in
the future. ere will join us later. let me bring up tv , this is great. you can see, does the bowtied match the suit? i tried to make this work at 2:00 a.m. you can look at any given chart. snap on over and you can steal that function. if you could do that nowhere else in the world. this is bloomberg. ♪
johnson, rested and cool and london. he is in for francine. keene in a fractious new york. our world headquarters, i will call it a comfortable five block walk from the trump tower. is -- as leaving reporters said, a frenzied press conference. we will do much more. business in washington on nafta. kevin cirilli will be that. peter kinsella joins us with commonwealth bank. , as well.mas charles, you have written an awful lot on trade flows. with your perspective on china and canada, do we need to fix nafta? charles dumas: yes, certainly. into the united states from mexico as we
analyzed it is 40% u.s. content. there is no conceivable way that you will cut that off. few would be cutting off your nose to spite your face. -- you would be cutting off your nose to spite your face. the content rules and a saving face for mr. trump as i can see. anything in the litmus paper, i look at the canadian dollar is about oil commodities as maybe the spirit of canada, peso seems to be a barometer for what mr. trump will do with a wall. do you have knowledge about foreign-exchange folded into nafta? peter kinsella: we do not really. it will have to be on things how they go. the renegotiation of nafta, you think it will be a dollar positive and i will say maligned
and development for the peso. the canadian dollar will be left unaffected. broadly, you would assume modest dollar strength as of the results of a renegotiation. isthat is significant or not an entirely different story. when you see trade negotiations, it's a simple fx the pot -- it simply affects the pipeline. , doesn'tdollar story that positive dollar story gets undermined? i have the interest rate probabilities here for the bank of canada and it looks like they are going to raise rates probably this year by january. we will see a rate hike coming through from the bank. does one of said the other? peter kinsella: not quite. we broadly price in another rate hike in this year.
i think we will see as other cpi data calls out on friday and we will see. marcus think september or october. -- the markets think september or october and to rate hikes next year. i think that is fair. i do not think it will have a huge effect now. tom: i have to dazzle peter kinsella and we will go to dollars/mexico. knows this.s 1994, the beginning of nafta. for pesos per the dollar. the mexican peso crisis and then charles dumas, you have a good line, another failure of the mexican currency. more stability and more gradual failure. here is the trump election. it is basically trade by dividing way she, isn't it?
charles dumas: i suppose you can say that. i do not know enough about the domestic inflation rate in mexico to say how much israel. tom: it may be real. -- how much is real. currency a part of traded negotiations. peter kinsella: they should it be but increasingly they are. .exico had a benign profile only last year, the last 18 months since we saw it depreciated, it picked up a. bellevue is mexico cpi has the view is mexico cpi has topped out. countries that have huge surpluses especially trade surpluses, there is an argument to say that there currency is undervalued. if you look at the criteria that the u.s. treasury looks that, balance etc.
like adoes not look currency manipulator. guy: peter kinsella, thank you. laterortant conversation today, the former american ambassador to mexico, mr. garza, looking forward to that in the 7:00 hour. stay with us on the president in the next hour. marty schenker and mr. valliere and there is mr. trump's new york. ♪
>> thank you all for your service. guy: theresa may has journeyed .own delivering the speech britain's and the queen elizabeth. that will be a second aircraft carrier called the prince of wells. she makes the speech on of the deck of a symbol of how the u.k. is hoping to project power around the world and the symbolism of the fact it is not a nation in retreat but on the front foot is what i expect the
team is hoping for. tom: it is an extraordinary carrier. i find it interesting that the queen when she christened it did not use champagne. she used a bottle of whiskey to blessed the boat. that is an important distinction as well. from the packaging of queen elizabeth that's pageantry -- packaging to queen elizabeth to peter kinsella and charles dumas . charles dumas, as we look at those world of events, what will you write about, what will be your research note? charles dumas: i am mostly sold on germany growing at a sustained rapid rate. and also, changing in a very important away that is now
mostly driven by domestic demand and construction and by demographics, which is a positive and cox people by surprise. that is caught people by surprise. -- that is a big one. -- and called people by surprise. --that is a big one. guy: where can i create out for -- alpha? what we havea: seen israel money in hedge fund stories. playing catch up with european exporters. -- what we have seen is real money in hedge fund stories. guy: i hope i can get the chart up. this looks a little complicated a pretty euro-dollar. you have the s&p. turned an 600 has underperforming the s&p.
peter kinsella: i think from ecbs perspective, will the try to stop it down? my answer is no. as long as growth rings it will do what it do, they will not be overly concerned. tom: this has been fabulous. thank you. peter kinsella and charles dumas . coming up in a conversation with my gay --liere and in and in my decades of knowing camp, his most inflammatory note , many in the white house will resign. -- and in my decades of knowing him, his most implement -- inflammatory note, many in the white house will resign. ♪
of the king -- let the debate begin between canada, mexico and the u.s. chaos within the trump frenziedation in a press covers, president defends actions of supporters of white nationalism and supremacy. good morning. this is "bloomberg surveillance" from world headquarters in new york. i am tom keene and guy johnson in london. the little bit of economics before we go to the politics with the taylor riggs in our good guests. could european economies grow? guy: absolutely. we saw gdp comic through. through ed wilson italian data confirming what we thought was true and becoming --
we saw gdp coming through and we saw at how your data confirming was without was true. problemio draghi have a with a stronger euro? tom: we will look at the politics that occurred last night and forward for the trump administration. here is taylor riggs. taylor: president trump has reverted back to his original position on the violence in virginia. at a news conference, the president said a blame on both sidess and blamed what he called a very violent liberal protesters who confronted white supremacist. out talking points asking republican lawmakers to defend the president's remarks. in alabama, there will be a runoff in the u.s. senate race. luther strange was backed by president trump will face former alabama supreme court justice way more. -- roy moore.
the uk's says a physical border with ireland after brexit is completely unacceptable. the brexit department said negotiations need to show flexibility and imagination when it comes to the border between northern ireland and the republic of ireland. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. guy? tom? tom: thank you. a turn to the market. the korean recovery is a little off. euro 117. equities to the vix doing the better near the tenant range. i noticed, stronger japanese yen, weaker korean won. guy: that is interesting. that has faded off the agenda.
european stocks well. we have had stronger wage data. of 3000, ading north big move. a lot about the expectations for electric car battery. another pistol strong data confirming it is likely the czec central banks will raise rates. sorry, trading down. tom: thank you so much. the symbolism yesterday in the trump tower was extraordinary. secretary chao and secretary and behind,cohn general kelly. here is the president. president trump: there is blame on both sides. you look at both sides, i think there is blame on both sides. in: we get to greg valliere a moment.
first, our senior executive producer for government and economics, marty schenker. how will washington react to what we saw yesterday? andave the punditry back-and-forth. what will the leadership do in washington? marty schenker: they will stay home. congress is out of session and a good thing they are. i think they will be happy to run for cover on this one. the reaction yesterday was fairly muted because a lot of these guys and women are not here. they are not reachable in many cases and to do not want to be reached. in some sense, it is a good thing they are in adjournment. tom: what changed yesterday with administration? we will get to greg valliere in a moment. what changed yesterday? marty schenker: many of us have
been used to donald trump being extraordinarily different, but even for a, that press conference had an out of world quality. a that hallmber in gave it a kind of cinematic touch which just embellished the jaw-dropping nature of the competition between donald trump and the press. guy: the people standing next to him, where does it leave them? are they guilty by association as a result of being as close to the president they were yesterday? this is their complicit nature of the cabinet? mnuchin this leave mr. and mr. cohn? they are in the same place they have been through this administration when it don't trump jim comey and accused president obama of --
when a donald trump fired james comey and accused president obama of wiretapping. they can apartment allies his behavior does compartment -- compartmentalize his behavior. they are deciding they are serving the nation as much as the president feels him tom: where is the president this morning and what will you do to avoid a frenzied day as cbs called the press conference yesterday? still inenker: he is new york. i am not sure if he has any public events scheduled. , david there will be duke, the former head of the kkk , endorsed donald trump's speech, comments. will he be challenged to disavow that endorsement? he had a hard time doing that
during the campaign. this issue is not in any way going away. donald trump made it front and center. tom: thank you. joining us is greg valliere from verizon investments who wrote of the most extraordinary note i have seen from him in a decades. thank you. how and when will general kelly resign? i think before thanksgiving and maybe well before. he failed, he totally failed to curb trump and his tweets. i think we will see more resignations from the presidential council. if there is a boycott effort against their companies, you will see a mass exodus within hours. askedhe first time i have this on air. the legacy from 1973 to 1974. is the republic party preparing
for a president pence? : i think at a private, many are. people like paul ryan, mitch mcconnell, orrin hatch, they have to be thinking about something like this. you cannot say there are very fine people on both sides. there are not find people who go to nazi rallies, i am sorry. guy: what type of numbers do you expect in the midterm? greg valliere: the midterms in the senate, because of who is up, i think they will be ok. the house is in play. everybody who is possibly vulnerable will have to run away from trump. guy: where is the agenda? where is tax reform? infrastructure? yesterday was meant to be about infrastructure. are they toast now? here's maybe a
slightly contrary in thought. a lot of republicans will move on without him and ignore the white house and move on tax reform and they might move an infrastructure. as we get anything, we will get it despite of trump, not in favor of trump. tom: thank you for joining us. i am absolutely fascinated by what a moderate republicans do. you and i remember the election night when bucks county, pennsylvania was going for mr. trump and i did not expect that. where are those mainstream republican voters on this when they look at his comments on white nationalism? greg valliere: i think this has to discuss to them. -- disgust them. by labor day, i think his approval rating could be under 30%.
takeover offer. two unexpected problems for merck, the danish logistics posted a surprise $69 million loss in a the second quarter due to write down in the tinker unit. the company said a cyber account will wipe off $100 million. there is your bloomberg business flash. tom: thank you. we have been looking at the washington and perhaps what the president will do. sebastien galy synthesizes this for deutsche bank. what does a micro strategist do? what is the micro? toastien galy: the ability take a view on the market and try to exploit with models. tom: bring up the chart when you get a chance. a chart we have shown a lot and gone from being a textbook weak dollar, absolutely course on elegance. an elegant point.
three in a row. we are right up here. coming up dollar against classic resistance. which way? sebastien galy: first, a weaker dollar. the market is desperate for a trend versus the euro. there is some degrees of civility in the dollar and inflation in the u.s. is relatively weak, it will continue until we hit to the in the u.s. and that will probably take another month or two. the labor market is tightening and we will get some wage growth. guy: is it a dollar trade or a euro trade? sebastien galy: a mix of the two. a dollar trade and versus the euro, a question of stability. you are doing well and what with the people who thought
it would go to $.80 and as we move to higher, price euro type of behavior and moved to 120 and parity is.e the market is hesitating in the transition at the low 120 probably takes a week or two and we will settle in that range. 50-50 if wekets are will get a hike out of the said. -- the fed, do you think that is the right number? and what about december? sebastien galy: i think that is right. simply that the housing market is not doing as well and will create a deflationary pressure or less on the cpi. that will keep inflation relatively low. cpi is extremely sticky in the united states.
tom: good to have a microstrategy us. this is extraordinary. we will rip up the script. the president of the united states has tweeted on amazon and bricks and mortar. you cannot make this up, folks. mr. bezos is doing great damage to tax paying retailers, towns, cities and states through the united states are being hurt -- many jobs being lost! it is great to have seth masters with us to talk impromptu -- sebastien galy to talk impromptu. this is an incredible statement from the president of the united states. sebastien galy: amazon is changing the way we operate and buy things and a sign of productivity and innovation. he is trying to defend part of his base. it used to be the case that if had toted to erode you
take your car apart and that was the rule because they were trying to stop this. unfortunately, the president, this process will continue. walmart is about to report numbers. i have a walmart chart. sells threeect, it times more stuff in the u.s. than amazon and the stock has been climbing. while others are getting hurt by amazon, those who can forgot how to make of the system are still doing well. this is how capitalism works. tom: this is perfectly said. an important concept and goals to thomas, a profit of innovation. he went from london school of economics over to harvard and said things can get blown up and as a they are being blown off,
we do not know really what is going to happen. the presidency is a certain about the i'm planning of it -- the un-planning of it all. sebastien galy: we accept the risks. the equity market's responsibility is not the ceo but the equity older -- folder. people take risks. tom: i believe i saw amazon headlines and our goal of creating jobs in bristol in the united kingdom one example. come back in. yellenould it be janet that has an issue with jeff bezos? in some ways, you take a look at the volume that amazon ships and then it's a bottom line and it makes no money. the u.s. consumer is getting a free ride off of amazon because amazon is not there to make a profit by the
grab territory and given the consumers very cheap goods and not paying out to shareholders. maybe janet yellen should have a big issue, this the disinflationary force that seems to explain some of the data we are seeing. sebastien galy: it is. these pressures as you are seeing a the one you mentioned, the fact there is competition and people look at the prices of somebody else and assess there's. it makes your life -- and sets theirs, and it makes her life very difficult. , thank youien galy for comments. without question, my interview of the day, the conversation with the congressman from paterson, new jersey. bill pascrell on a president -- bill pascrell.
go to some ways, is it a think the trump agenda not delivered on because we may need this kind of economic reform and boost in a couple years time when the recession does arrive? bill pascrell: from an economic point of view, it is hot -- sebastien galy: from an economic point of view, it is hard to estimate a recession. it is not needed now so conditions that don't trump is the first half of next year might make sense, we are not there yet. helpful. the program do not make much since considering how fast the economy was so it might be a good asset. tom: you mentioned stronger dollar here. your colleague says at the same. how did we get to that better economic growth? through investment? what against pop to get us to
better growth a year or two years out? sebastien galy: capital expenditures is relatively weak. much of the past from emerging markets and is growth does more difficult, companies are reluctant to invest and would rather do buybacks. the internal cost of expanding are capex versus your gains on equal. it will take a bit of time to investigate and continue to do so which is slightly unfortunate and would be somewhat how for that the fed would hike. guy: a final, quick a question. the minutes we will get later on this evening. if we start to unwind the balance sheets in september, is in the market set up for that? sebastien galy: it is an expects about 10 billion. make mucht seem to
difference in the markets and relatively light all in all. the only question is whether we will get a much larger fiscal deficit coming out of the united ,tates rather than the tapering taper versus higher fiscal deficit would be much more difficult. and then what about the united states? tom: thank you so much. we will continue with mr. galy. opinion onl have an the president's tweets on amazon in the 9:00 hour. howard on retail america. overmorning, a fog president trump's new york. ♪
3:00 p.m. yesterday afternoon. extraordinary beauty and our nation's capital. ongive you a briefing american politics with our first word news, here's taylor riggs. taylor: president trump has pivoted back to his controversial opinion on the violence and charlottesville, virginia. president trump: there is blame on both sides. ande is blame on both sides i have no doubt about it and you do not either. news conference, the president faulted violent liberal counterprotesters who confronted a white supremacists. the white house sent out talking points asking republican lawmakers to defend the president's points. president trump said the quick ceos quitting his counsel are not taking to their -- president trump said the ceos quitting his cancel are not taking their job seriously. he said merck is an example of
companies having their products made overseas. if the president continues with threatmer to not pay -- to not pay subsidies, the cbo said it deficits will arrive. angela merkel's rival said the u.k. needs to keep it simple when it comes to brexit. the social democratic party's martin schulz said the british may complicate things by releasing position papers before the talks. should begotiations left to do their work. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries, i am taylor riggs. this is bloomberg. guy? tom? tom: the symbolism is extraordinary. kevin cirilli outside a trump tower yesterday and now outside of the historic portman a tower, the marriott portman, an extraordinary tower on the
national historic register in places. president i would guess president eisenhower lived -- president eisenhower lived in their area let me fault in the news flow you side yesterday -- lived in that area. a the newsault in flow you side yesterday. will it be impacted by the president? kevin: i do not think so. the national discourse, no question that all of america's attention is gripped coming out of washington with yesterday's speech by president trump. where theen this president has his back a gift of politically speaking at he doubles down -- has his back at this the wall politically speaking at he doubles down. we have seen the trickling of business leaders distancing themselves from the administration. i spoke to several sources last night with the republican party for telecommuting that this
morning, we are going to see more republican officials, including a top republican started to distance themselves even further from president trump's remarks yesterday. we have seen a mr. romney tweeting out, distancing himself and a john mccain. tom: i would suggest the canadians and mexicans have a reason to distance themselves from the discussion. how will they adjust to the fractions in washington politics? kevin: we have seen mexico consistently say they will not pay for the wall. when lawmakers and get back to washington in september, they have to vote on a government funded the bill. there is a charter there could be funding for the u.s.-mexico wall. that could call up today. we will hear from the trade representatives from mexico,
canada and the u.s. later today. be --negotiations said set to begin behind me. it will be interesting on the messaging, whether combative or conciliatory tone following these meetings. guy: guy in london. we saw the president getting frustrated with the talks, will he walk away? kevin: that is a great point. typically, in terms of the negotiations and conversations , -- mexico, the president's the president, we have seen where he has been very receptive. i remember on the campaign trail, following candidate donald trump following the meeting with the mexican president and that was much more conciliatory. /florida when he became part -- flash forward when he became
president and more fiery rhetoric between the two. president trump will not to be here. -- he will head back to bedminster to continue with his working a vacation. yesterday was a positive i infrastructure -- yesterday was supposed to be about infrastructure and to death by a nafta but everybody will be talking about the press conference -- to be about abouttructure and today nafta, but everybody will be talking about the press conference. guy: the president needs a win and what would it than life or nafta? kevin: when congress comes aback, they have 12 legislative days to raise the debt limit and secondly pass a government funding bill. if that board wall is in, there could be a partial shutdown. a busy month.
tom: thank you so much, kevin cirilli. with his tweet on amazon and ripping apart amazon and jeff bezos. and the target, their digital sales up 32%. whether itite sure is year-over-year or quarter on quarter or whatever step that is extraordinary. part of the retail stew. right now, with the peterson institute, carolyn. i look at a nafta and the challenges, what are you trying to observe in the discussions and the ongoing discussions in coming weeks? >> i do not think we are expected to find out very much of this week and after they meet, they will pretty much say they have met and started negotiations. maybe we will hear about the mood and how people feel and how negotiations are going to you as
is planning to table quite a lot of text and they are covering 20 areas in this agreement. tom: the complexity israel. a guest from berkeley who will goes to the labor market that the u.s. made in 1990 four and we did not subsidize or assist labor that was lost because of nafta. will it that be part of the negotiation? caroline freund: yeah, i think you're talking about labor at adjustment and if that is the kind of policy we would want to deal with workers that lose their job whether losing because of the trade war because of technology. let's keep in mind as you were talking about the amazon tweet that amazon creates jobs, they are different jobs. we would want the kind of labor and adjustments that allows
people to move both regionally or across industries. typically, that is bit on the democratic agenda, not on the republican agenda -- that has been on the democratic agenda, not on the republican agenda. guy: how long do you think it will take? will the trump administration be in existence? how long will it take to deliver? caroline freund: that is a great question. i have looked at the timing of other trade agreements and the only trade agreement that took less than a year were jordan, bahrain and the dominican republic. the dominican republic signed on and that was super easy. if you will notice about the other three, agreements that are not very contentious and not a lot of trade and eight kin -- and a king who can sign on.
nafta is our most controversial and will take a long time. i think the spade detailed -- datingnd eating -- speed of meeting every two weeks will be difficult. you need a little bit of time between the meetings for the 2 sides to absorb what the other one will want. meeting every two weeks, it will be difficult to move forward. guy: we talk about that u.s. politics influencing this. election mexican coming up. caroline freund: that is the reason they wanted to do it to because of the mexican election is coming up in 2018. the other candidate is a populist and having the u.s. talking about a wall and the talk will make it difficult for mexico to make bit them concessions -- big
concessions. drawn out, dragging on a big trade agreement that will take years, renegotiations. the other is to do it quick but focus on a few areas and really do an incremental thing or a side failed to nafta like in october agreement or something like that. -- sided deal to nafta like an auto agreement or something like that. tom: thank you, caroline freund. coming up, my interview of the day, the congressman from paterson, new jersey, bill pascrell on the last few days' events across america. new york city and in the fog, the president on 5th avenue. this is bloomberg. ♪
taylor: this is "bloomberg surveillance." wells fargo has named former fed governor betsy duke as the new chair. she will be the first woman. she will have to deal with various fallouts. wells fargo admitted to opening millions of accounts without users' permission. talks tohe exclusive break up to $12 billion from foreign investors. those investors include japan's softbank and china and u.s. equity firms. the deal hangs on the outcome of a courtroom fight between 2 board members. target shares are rallying. , salesailer reported
above estimates. tom, shares are rallying up 4%. we estimate dichotomous economy on retail. yesterday, retail sales that we beat estimates. broad-based gains from department stores and target posting better-than-expected earnings. aboutws you keep hearing the death of retail and the brick-and-mortar but target supposing the digital retail getting ahead of the amazon story. tom: there it is with target on the back of the president's tweeted bashing amazon this morning. this is without question the interview of the day. i get emotional about this because of the grandparents came out of ellis island and the first thing they did was drop the vowel on the end of the name. it is bill pascrell, the congressman.
we have the expert on the ku klux klan and the italians of the 1920's. mr. roffman of the university of alabama and i need your comments as a voice for a italian america of what we have seen the last three days. rep. pascrell: of italians went through this, having a backseat. there was a place at the table, tom. what we have seen the past three years, you have to get to understand what is going on. regardless of what you are talking about in what area, whether sports or politics or geography, you will come back to what happened in charlottesville. not going to believe what the president of the united states has done to us. europe was above last week when i was there and abuzz if you read last night what was going
on. they cannot believe what is going on. it is an embarrassment. tom: your district, it is over west of new york city, your district is the crucible of what the white supremacist hate, old italian manufacturing with an arab community and you were in a rebound district, a jewish community. what is it like at ground zero of what the white supremacists hate? rep. pascrell: diversity is what they do not like. it is not different than what hitler's talked about. concernedhas to be about this. everybody. we do not think about that this until it happens to us, the individual. i have one of the most diverse groups in the entire nation. i am proud of it. i know what i have to do.
i was mayor of the city very diverse, paterson, new jersey. up,y morning when i woke i'd not only had an agenda of what needed to be done, but i had to work with is 62 minority groups. but when 150,000 people. tom: i want to bring in guy johnson. guy: good morning, congressman. given that, what you have learned, with live seen in your past, what does america need to do? pot,ca has been a melting its history speaks to that. how does america reverse this? rep. vargas: world we will -- we -- rep. pascrell: we will not let a few haters decided the future. that means everybody comes forward. six, the lord whom i have to send and we stand
and say, stand me. we have to be involved. the government will not stand -- solve them, tom will not solve them, wall street will not. individuals have to be concerned about what country you we want our children and grandchildren to grow up? i want them to grow up in a country where everybody can give each other a chance and an opportunity. tom: we are also talking about nafta. let's say you went to the college station, texas. you are surrounded by these nationalists, these the premises suprema so premise -- cists. what can a moderate republican the hatred? rep. pascrell: we have for borders and you would think we only had one. a border on of the rio grande is
only part of the situation. it is not going to keep people out of that way. right to know everybody who is coming into this country, no question. and a border with mexico california and it border between new york city and new jersey. rep. pascrell: a very important one. tom: what will you do with a nafta? constructive former pontiff and central republicans -- constructive democrats and central republicans? rep. pascrell: when the president makes a good choice, it may be unusual, but you will have to say it. we have met with him. today andations start will be a very tough take. we need to make sure that american families and workers are not simply going to be protected, but they have an
opportunity to move forward. paterson, we lost the textile industry for a lot of reasons. with a tie-in between the congressman from new jersey and sebastien galy of deutsche bank. we saw the tweet about amazon. do -- did jeff bezos kill american jobs? no, it was ay: structural shift. it was not sustainable enough as america got richer and richer and some just a can sustain and these jobs are creative and new and we going to big changes. tom: we will continue. sebastien galy, thank you so much for you being here. the knife congressional district of new jersey -- 9th congressional district of new jersey. guy: a function.
guy: this is "bloomberg surveillance." david westin joins us. david: another thing in the u.s., we will start the nafta nick -- nafta negotiations. we have the ambassador from g -- george w. bush for many years and the grandson of a mexican immigrants. he is republican from texas was a very thoughtful approach to u.s.-mexican relationship. guy: thank you very much. comingestin " daybreak" up. simon, the british prime minister came out with a statement saying it is important to condemn far right views.
clearly, she finds herself in a difficult position. she find a way out of this problem? in some ways, the brexit stories changed on the u.k. -- story is hinged on the u.k.? simon kennedy: a trade deal with the u.s. would be a big deal and provide ammunition to justify brexit. she have to tread carefully. the statement she made it to the white house in january turned into a lot of criticism. today, talking about not naming the president directly but others in her cabinet including the secretary is more punchy onto twitter but not naming the president by the name. she has to be very careful. she wants her to read bill -- traded deal. meetvolatility that might
any trade deal if the british government is unfriendly. guy: we had the paper, got and another on what is next? simon kennedy: i think we're off the hook the rest of the week. we will have to see. the eu noted, that produced nine and maybe half a dozen. there are bigger issues. guy: great stuff. simon kennedy, bloomberg brexit editor. their wraps of things with "bloomberg surveillance" and tom will continue on radio. the daybreak team will continue next. ♪
focus from his legislative agenda. amazon joins the credit binge, adding to the $1 trillion of u.s. high grade bonds already issued so far in 2017. and investors lock to the federal reserve minutes for clues on how inflation figures might shape the central bank's next move. from new york city, good morning, good morning. this is bloomberg "daybreak." i'm jonathan farrow alongside david westin. alix steele is on assignment. yesterday, a pretty black session for the s&p 500. this morning, stocks firmer in europe and firmer, if you look at futures, up about .2%. euro-dollar softer by about .3%. reuters out with a report saying that perhaps president draghi's speech at jackson hole won't be much of a news-making one. the euro falls back to 1.17. treasury through yesterday after the strong retail sales, stable today at 2.28. david: now